With social distancing still in effect to varying degrees nationwide, the ridesharing market has slowed virtually to a stop. Consumers staying home have very little need to order an Uber to get to their living room. The company announced 3,700 layoffs and its CEO isn’t taking a base salary this year.
It is the latest in chilling news out of Uber and the gig economy in general in the last few weeks as nationwide firms and the gig workers who made up the emerging economic force have been scrambling to pivot in the wake of an unprecedented event.
“I would say like 90 percent of it just stopped,” Austin-based Uber driver Joshua Miller told Marketplace. Miller has since stopped working the ridesharing gig because he’s worried for his health. If there were passengers looking for rides, he would get out there in a mask, but why bother given the lack of demand? “It’s just totally not worth it doing ride shares,” Miller said.
And that might not change for a while, as even Uber itself is encouraging riders to stay home — to the point of literally thanking them for not riding.
But just because Uber is out of the business of giving rides for the time being doesn’t mean Uber is content to be out the game entirely. The firm has spent the past several weeks re-prioritizing and shuffling its offerings in a variety of ways — starting, in fact with its workforce and the launch of the Work Hub for underemployed drivers looking for new gig work to take the place of the hours they had lost.
The Work Hub lets Uber drivers receive other work from the company’s other platforms such as Uber Eats, Uber Works and Uber Freight, as well as other options outside the Uber ecosystem like Domino’s, Shipt and CareGuide. “The most important thing we can do right now is support drivers,” Uber CEO Dara Khosrowshahi wrote on the Work Hub homepage. “They’re doing essential work to keep our communities moving as we fight this virus, but with fewer trips happening they need more ways to earn. With the Work Hub, we hope drivers can find more work opportunities, whether that’s with another of Uber’s businesses, or at another company.”
Former Uber driver Miller is one such repurposed worker. He’s now making deliveries for Uber Eats.
Apart from the expected uptick in interest in Uber Eats, Uber Works and Uber Freight, the company also as of this week has also been reporting growth in areas that are less expected. For example, Uber reported that despite the cratering economy, its UberJets private-jet booking app has seen sales soar 79 percent in the first quarter .
Other than the obvious appeal of private air travel in the era of COVID-19, Uber also noted in its report on UberJets’ soaring sales that the firm has adopted increasingly rigorous health and safety guidelines in line with World Health Organization (WHO) and Centers for Disease Control and Prevention (CDC) recommendations. That includes all aircraft surfaces being sanitized before and after each flight, the temporary halting of personal contact between flight crew, ground crew and UberJets guests and the “on-going use of EPA-approved sanitizer, antimicrobial and disinfectant products for maximum protection results.”
However, even with UberJets travel up nearly 80 percent, that isn’t going to offset the loss of the company’s ridesharing revenue given how tiny the market for jet service was to start with. And while experts believe an Uber Eats uptick can offset some of the loss, that won’t be enough either.
Daniel Ives, an equity analyst at Wedbush Securities, told Marketplace he estimates about 10 to 15 percent of the 60 percent revenue loss Uber likely saw in the first quarter can be made up by Uber Eats. But that glum picture isn’t going to turn around anytime soon for Uber or any of the other luminary players in the gig economy.
“We think about 30 percent of revenue from the gig economy — which is Airbnb, Uber, Lyft — is what gets cut over the next one to two years, and maybe half of that disappears, never comes back,” Ives said.
Given the potentially sharp losses ahead, it is unsurprising that Uber announced 3,700 layoffs — or 14 percent of its workforce — on Wednesday (May 6) instead of waiting for Thursday’s earnings report. Additionally, CEO Khosrowshahi agreed to waive his base salary for the rest of the year.
“We are looking at many scenarios and at each and every cost, both variable and fixed, across the company,” Khosrowshahi said. “We want to be smart, to move fast, to retain as many of our great people as we can, and treat everyone with dignity, support and respect.”
The CEO went on to note Uber would give employees “a further, final update” within two weeks.
On the other side of the world, Uber is due to cut hundreds of employees in India, according to unnamed sources. “The company is set to lay off up to 700 people in India. The decision has been almost final and likely to be announced when lockdown will get lifted,” one of the anonymous sources told Entracker. “With this, Uber would be laying off about 25-30 percent of its overall workforce in India.”
But it’s worth noting, that not all expert voices are entirely pessimistic about the future for Uber or its fellow giants of the gig economy. Gene Munster, a founding partner at Loup Ventures, told NPR that although the next six months will be quite difficult, the longterm outlook is sunnier than the cynics let on.
“I think human behavior is moving to these ride-sharing networks,” he said. “I think there’s just a lot of friction around car ownership and all the things that existed before. All those growth themes exist after [COVID-19].”
We’ll hear more Thursday when Uber earnings are out on the company’s new direction, what the exact numbers really look like and where the next round of focus is.
Most importantly, we’ll learn what Uber thinks is next for an industry turned upside down and backwards over the past several weeks. Stay tuned.